After making gains during the very early stages of the week, precious metals spent the latter stages of the week losing value at just about every turn. Now, gold is back below $1,100/ounce while silver backed down below $14/ounce. This is something that has been a recurring theme because market conditions are such that investors are not very interested in the safe-haven qualities offered by gold and silver.
This week was not all that exciting from an economic nor geopolitical standpoint, but there was plenty for investors to talk about. As we head further into the month of January, investors are hoping to receive more information regarding retail sales and other holiday-related data.
Unemployment Claims Rise Unexpectedly
One of the biggest pieces of data made public this week came Thursday in the form of the most recent weekly unemployment report. According to the Department of Labor, first-time claims for unemployment benefits ticked up by more than 5,000 to bring the seasonally adjusted average up above 280,000. This was not the best bit of news, but it also was not viewed as being overly disappointing either.
Though the Labor Department did not cite specific reason for the increase, I am under the impression that laid off seasonal workers are to blame for claims moving upward. You see, during the holidays, many retailers hire employees solely to help them through the holiday rush. Being that the holiday rush is over and retailers did not fare too well, it makes sense that claims might tick upward.
Beige Book Indicates Continue Economic Expansion
The Federal Reserve’s Beige Book was released on Thursday and was interpreted as being overly positive. Of the 12 Federal Reserve districts reporting, more than three-quarters of them indicated that growth was moderate over the course of the past month and a half.
Though the Beige Book is not the most highly anticipated piece of economic data, it is still nice to see that the US economy is still functioning at a relatively high level. Going forward, this bit of data will only serve to lend credence to the belief that interest rates in the United States will continue to be raised gradually throughout this year.
Geopolitical Tensions Make Headlines
Last week was big for investors focusing on geopolitics, but things calmed down a bit this week. The biggest story came earlier in the week when it was reported that Iran had taken US Navy men into custody. The story says that two Navy boats drifted off course and ended up in waters controlled by Iran. Iranian Naval forces intercepted the soldiers and took them to shore simply to figure out what was going on. Quickly, diplomacy prevailed as US and Iranian foreign ministers met and talked to hash the situation out.
At the end of the day, this was not too big of a deal as the soldiers were allowed to depart the next morning and return to normal duties. The reason this story made its way to headlines is due to the fact that Western-imposed sanctions may soon be lifted in exchange for Iran’s continued cooperation with regard to their nuclear pursuits.
The biggest story connected to this is that if sanctions are lifted off Iran, it may release Iranian crude oil to Western markets. For years now, Iranian oil has not been allowed to be sold in many Western nations, and it may drive the price of crude oil downward even further.